Stronger than we think

Stuttgart, FRG--The troubles that
descended on the financial markets of Southeast Asia and Latin America in the
fourth quarter caused some U.S. economists to downgrade their 1998 growth
projections for North America's surging manufacturing sector. But if you want
some reassurance on the underlying strength of the U.S. economy, just ask
someone outside this country.

On a recent trip to Germany, I found that both business leaders and
government officials were quick to sing the praises of the U.S. as the land of
opportunity. "More German companies need to start competing in the U.S.," said
Günter Königsdorf, who represents the economic development arm of the German
state of Baden-Württemberg, a region that is home to Mercedes-Benz, Porsche and
many other auto-related firms. "The U.S. is the best playing field for
international competition."

During the same week, German President Roman Herzog told a high-level meeting
of business executives that German firms need to follow the U.S. lead in taking
risks on new technologies that fuel growth. He noted that Europe was "clearly
better at worrying about our stability and our possessions than at unleashing
economic dynamism."

The economic performance of the U.S. throughout the '90s truly has been
amazing. In April, this country will begin its eighth consecutive year of
business expansion. The unemployment rate is at its lowest point in 25 years,
and inflation is negligible. Since the recovery started in the spring of 1991,
more than 15 million jobs have been created--virtually all in the private
sector. Moreover, the original equipment market has served as the economic
pacesetter, with its output rising by nearly 8 percent in 1997--compared to
about a 5 percent growth for manufacturing in general. This past October,
manufacturers added 54,000 jobs--the largest gain in more than seven years.

Few people are foolish enough to believe that we've put an end to business
cycles, but more economists now talk about a new paradigm that will discourage
deep business slides. Peter Schwechheimer, of the Boston-based economics firm of
Charles River Associates, cites these key factors--

The end of the cold war and the release of resources from the public to
private sector.

Fiscal restraint within the U.S. government in contrast to past's deficit
financing.

Leaner businesses as a result of downsizing, re-engineering, and a sharp
focus on technological innovation. Practices such as just-in-time
manufacturing have drastically reduced the inventory buildups that once
resulted in manufacturing slowdowns and layoffs.

A shift to market-driven economies around the world, which has opened up
new business opportunities in every region.

Technological revolution in the U.S.--especially the widespread investments
in factory automation--that has cut costs and boosted productivity.

A persistent inflation-fighting policy by the Federal Reserve, versus past
policies of government "pump-priming" to fight unemployment.

Says Schwechheimer: "Federal Reserve Chairman Greenspan has wisely chosen to
raise interest rates before inflation takes hold, rather than waiting till it
surfaces and it is too late to do much about it."

All these factors will continue to shore up the U.S. economy in 1998,
economists say. A recent survey of manufacturers by Cahners Economics found that
93% planned to spend as least as much on new machinery as they did in 1997. Such
statistics are what makes the U.S. economy the envy of the world, despite the
temporary jolts from financial markets and the inevitable setbacks of emerging
countries.

If a major catastrophe strikes your area, will you be prepared? Do you know how to modify the tech you've already got or MacGyver what you need to fit your own situation? A free, five-day Continuing Education Center course starting April 6 will show you how.

Focus on Fundamentals consists of 45-minute on-line classes that cover a host of technologies. You learn without leaving the comfort of your desk. All classes are taught by subject-matter experts and all are archived. So if you can't attend live, attend at your convenience.